Service-Department Costs (CPA) The Parker Manufacturing Company has two production departments (fabrication and assembly) and three service departments (general factory administration, factory maintenance, and factory cafeteria). A summary of costs and other data for each department prior to allocation of service-department costs for the year ended June 30, 19_3, appears below.

The costs of the general-factory-administration department, factorymaintenance department, and factory cafeteria are allocated on the basis of direct-labor hours, square footage occupied, and number of employees, respec- tively. ‘There are no manufacturing-overhead variances. Round all final calcula- tions to the nearest dollar. Choose the best answer:

1. Assuming that Parker elects to distribute service-department costs directly to production departments without interservice department cost allocation,

the amount of factory-maintenance department costs that would be allocated to the fabrication department would be

a. $0.

b. $111,760.

c. $106,091.

d. $91,440.
. Assuming the same method of allocation as in item 1, the amount of generalfactory-administration department costs that would be allocated to the assembly department would be

a. $0.

b. $63,636.

c. $70,000.

d. $90,000.
. Assuming that Parker elects to distribute service-department costs to other service departments (starting with the service department with the greatest total costs) as well as the production departments, the amount of factorycafeteria department costs which would be allocated to the factorymaintenance department would be (Note: Once a service department’s costs have been reallocated, no subsequent service-department costs are recirculated back to it.)

a. $0.

b. $96,000.

c. $3,840.

d. $6,124.
. Assuming the same method of allocation as in item 3, the amount of factorymaintenance department costs which would be allocated to the factory cafeteria would be

a. $0.

b. $5,787.

c. $5,856.

d. $148,910.
GENERAL FACTORY FACTORY FACTORY FABRICATION ASSEMBLY ADMINISTRATION MAINTENANCE CAFETERIA Direct-labor costs $1,950,000 $2,050,000 $90,000 $82,100 $87,000 Direct-material costs $3,130,000 $ 950,000 — $65,000 $91,000 Manufacturing-overhead costs $1,650,000 $1,850,000 $70,000 $56,100 $62,000 Direct-labor hours 562,500 437,500 31,000 27,000 42,000 Number of employees 280 200 12 8 20 Square footage occupied 88,000 72,000 1,750 2,000 4,800 required lp25